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Wells Fargo’s Betsy Duke quits before turn in Washington hot seat

Wells Fargo
Democrats atop the House Financial Services Committee issued a scathing report last week on Wells Fargo’s interactions with regulators.
(Paul Sakuma / Associated Press)

Betsy Duke stepped down as chairwoman of Wells Fargo & Co. ahead of a dramatic congressional hearing set for this week examining the board’s role in the bank’s scandals.

Democrats atop the House Financial Services Committee made no secret of their intent to target Duke and other past and current leaders, issuing a scathing report last week on the bank’s interactions with regulators.

On Monday morning, Wells Fargo said Duke had resigned, replaced by Charles Noski. James Quigley will also leave the bank’s board.

Duke, 67, who had been the most senior woman in U.S. finance, will have her chance to address the criticism. She and Quigley are scheduled to testify to the panel of lawmakers, whose bipartisan lashings already helped prompt two previous chief executives to step down.

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“Since we were made aware of the egregious harms suffered by Wells Fargo’s customers, we were and remain fiercely determined to do right by them and to strengthen the bank’s culture and controls,” Duke and Quigley said in a statement Monday. “We believe that our decision will facilitate the bank’s and the new CEO’s ability to turn the page.”

The hearings are scheduled to begin Tuesday with an appearance by CEO Charles Scharf less than five months into his tenure. The panel will seek his thoughts on next steps for what it calls “the bank that broke America’s trust.”

Duke, who had been on the board since 2015, and Quigley, who joined in 2013, are to appear Wednesday. They will be grilled on “the role of the board of directors in the bank’s egregious pattern of consumer abuses.”

“Duke and Quigley failed in their responsibility as board members,” committee Chairwoman Maxine Waters (D-Los Angeles) told journalists last week, saying she planned to call for their resignations.

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It’s a panel that has repeatedly dragged bank leaders to Capitol Hill for uncomfortable questions on a broad range of topics. Last year, seven bankers — including Scharf in his previous role as CEO of Bank of New York Mellon Corp. — faced queries on everything from China to climate change to gun makers to people living in Guam.

“The knives will be out,” Capital Alpha Partners analyst Ian Katz said. “They need to come prepared.”

The public is likely to get a tale of two Wells Fargos. The board has been touting its turnaround efforts after a series of scandals that began with the 2016 revelation that employees opened millions of potentially fake accounts to hit sales targets.

An annual filing last year trumpeted a refreshed board with beefed-up oversight and governance practices. When Scharf got the top job, Duke said he would advance a “continued transformation.”

But the report last week by Democrats was full of detailed accusations of the board and management doing too little. That prompted external calls for Duke to leave, and whispers inside the firm about when she might do so.

“She should’ve stepped down a long time ago, frankly,” Ryan Cohen, the Chewy.com founder whose stake in Wells Fargo exceeds $300 million, said of Duke before her resignation.

The committee’s Republican minority published a separate report last week with similar criticisms of the firm. The two reports differed over the role of regulators in the scandals, with Democrats saying authorities share blame for the bank’s failings while Republicans lauded enforcement efforts under President Trump.

Inside Wells Fargo, Scharf is preparing to answer questions on what he’s doing to get back in the good graces of customers, regulators and the public. He has met with nearly half the House Financial Services Committee, including Waters, since taking over in October, people with knowledge of the meetings said.

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He’ll be able to point to changes he’s made since taking the helm, including adding new leaders and settling past probes. And he can tout the bank’s recent announcements on minimum-wage increases, limited-fee bank accounts and lending to recipients of the Deferred Action for Childhood Arrivals program.

Scharf “can come on as a hard-nosed leader who is going to do the bidding of the public and fix things,” Davia Temin, founder of crisis consultancy Temin & Co., said. “America still loves a comeback kid.”

The board members face a different task, Temin said. “It’s harder to be part of the problem and then the solution.”

Noski, the new chairman, joined the board in June. He was the previous chief financial officer of Bank of America Corp.


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